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Smart Contracts

CRYPTO CLASS - Smart Contracts

A smart contract is a computer program that automatically executes a transaction when certain conditions are satisfied.

A simple smart contract metaphor is a vending machine. The buyer selects an item, inserts payment and the machine delivers the item.

Smart contracts on the blockchain could include registering a vehicle, sending notifications, issuing a ticket, or even transferring ownership of real estate.

When the transaction is competed, the blockchain is updated. Parties to the contract determine the rules that control the transaction and define a framework for resolving disputes.

There are multiple benefits of a smart contract:

Speed, accuracy, and efficiency. The contract is executed immediately after the conditions are met. Since there is no paperwork and no errors to correct, smart contracts are faster and more accurate.

Transparency and trust. Since there are no third parties and all documents are encrypted, no one will question whether the information was altered.

Security. Blockchain documents are encrypted and distributed. They are safe from hackers because a hacker would need to alter the entire chain to change a single record.

Savings. There are no third parties, such as lawyers or banks, involved in the smart contract. This reduces transaction costs.

Ethereum is the most popular smart contract platform.



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